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May 15, 2024
Effective July 1, 2024, New Direction will be updating the terms of its account agreement. The following is a brief overview of the changes going into effect. You can view the updated account agreements in full on our website.
Relationship—specified who New Direction IRA, Inc. (Administrator) and New Direction Trust Company (Custodian) are in relation to you the Depositor.
Arbitration—Update to where arbitration will occur (Johnson County Kansas) and what rules will apply (Commercial AAA rules). But please note that arbitration will not be administered by the American Arbitration Association.
Claim Limitation—One Year Claims limitation. any acts or omissions authorized by depositor or depositor’s agent, must be filed within one (1) year of the occurrence of the facts or circumstances that gave rise to the potential causes of action. Any claims that are not brought within the applicable time shall be forever barred without regard to any other limitations period set forth by law or statute.
Fraud Liability—You as the Depositor agrees to safeguard his or her account information, including the depositor’s username and password. The depositor agrees to notify NDTCO and/or NDIRA immediately, but not later than two (2) days after, any loss of login, password, compromise of email, or account information that may allow a fraudster to gain access to the Custodial Account or Custodial Assets. The depositor agrees to indemnify NDTCO and/or NDIRA from any losses sustained as a result of the depositor’s delayed notification and for any losses related to the unauthorized use of the Custodial Account or Custodial Assets.
Custodial Fees—Due before transaction. 90 days to dispute invoice, charge, or statement or else it is deemed as accepted by the depositor.
Cash Management—Details cash management program.
Change of Addresses—Gives you the Depositor 30 days to update account information and indemnifies New Direction Trust Company for losses if you fail to timely update their contact information with NDTCO.
Administratively Infeasible—Gives New Direction Trust Company the right to resign as Custodian of your account because an asset or account is no longer administratively feasible.
SECURE 2.0 – Changes have been incorporated into your Account Agreement.
If, after you review the agreement you agree to the changes, nothing further will be required. Conversely, if you don’t accept these changes, you will then have 30 days to designate a successor custodian for your account and provide notice to NDTCO of your transfer or fully distribute your account.
To initiate a distribution please follow these instructions:
- Login to the Client Portal.
- In the lefthand navigation, select ‘Distributions’.
- Complete the embedded DocuSign form.
- Note: if using a mobile device to complete the form, it is easier to view in the horizontal orientation.
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Below is further information about the key documents you will encounter with NDTCO, setting a solid foundation for a deeper understanding of potential tax obligations and opportunities. From understanding the intricacies of Form 5305 to the importance of your Annual Account Statement, each post is designed to empower you as investors.
Introduction to Tax Season and Understanding Your Account Disclosures
At NDTCO, we’re not just about innovating the way you invest; we’re here to revolutionize how you navigate the often-complex world of investment taxation as it might pertain to your self-directed account.
As self-directed investors, you’re already ahead of the curve, pioneering through your investment choices. This guide is your roadmap through the documents you’ll receive from us, complete with timing and tips to make upcoming tax seasons streamlined and successful.
Understanding Your NDTCO Account Documents
- Form 5305-*: Account Agreement
Timing: Agreed to with the submission of the account application.
What it is: This document outlines the general roles and responsibilities of the account holder and IRA custodian. When combined with the account Terms & Conditions, you will find information regarding the duties of each party including what is expected of you as a self-directed account holder and what activities your IRA custodian does and does not perform.
Why it matters: Setting clear expectations up front provides clarity and allows each party to make informed decisions. It serves as an important record for both the IRA custodian and the account holder. It’s a reference document for the plan’s features and rules, useful for both current management and future reference. Form 5305 matters because it is foundational for setting up an IRA that complies with tax laws, provides tax advantages and ensures both parties understand their rights and responsibilities.
It is the responsibility of the account holder to stay current with all applicable IRS updates and publications. Whether you’re an individual looking to secure your retirement savings or an employer aiming to offer retirement benefits to your employees, understanding and correctly using Form 5305 is a critical step in the process.
*There are different variations of Form 5305, each tailored to specific types of IRAs. Visit our website for a complete list of Account Agreements by account type.
- Account Terms & Conditions
Timing: Account Opening
What It Is: A comprehensive agreement covering the custodian’s business policies including account inactivity policies, a disclaimer on tax/legal/investment advice, prohibited transactions, UBIT responsibilities, valuation requirements, RMD obligations, and indemnification clauses.
Why It Matters: Establishes the operational framework and legal boundaries of the account, informing account holders of their responsibilities and protecting the custodian from liability. It ensures account holders are aware of their duties and the consequences of inactivity or non-compliance with regulations.
NOTE: T&Cs referenced here are for the account establishment only. Activity performed within the account will have its own set of terms and conditions applicable to the specific activity.
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Please note that the contents of this blog are accurate as of the date of publication and are provided for informational purposes only. They are not intended, and should not be construed, as financial, legal, or other professional advice. Readers are encouraged to perform their due diligence and should always consult a qualified financial professional before making any investment decisions.
